From Tony & Libby's blog. The article states that "HAMP itself has been a disappointment. Originally designed to help as many as 4 million borrowers obtain mortgage workouts, it had produced fewer than 70,000 permanent modifications as of Dec. 31. Another 800,000 or so homeowners were in a trial-modification phase." How very sad.
Most people have heard that the foreclosure prevention programs have not been as successful as Obama had hoped. It seems that one of the road blocks has been borrowers with a second mortgage.
Apparently there has not been an agreement with the second lien holders which causes the first mortgage to be modified even lower to hit the 31% of pre-tax income mark.
Clearly banks are not eager to modify loan payments at a loss when the second mortgage holder still gets a full payment. This is also not helping the home owners because how small can a payment get when only one of the two banks is working with you.
The new federal initiative gives incentives to the second mortgage holder to work with the first. This initiative has been in the works for a while but apparently was difficult to implement. To help get it going, Bank of America is the first major bank to sign on for this program, and should cause others to follow.